2009 (11) TMI 402

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....ns of income for the assessment years 1995-96 and 1994-95. The returns were perused by the Assessing Officer. The Assessing Officer while perusing the returns noticed that the assessee had provided its employees attire allowance and travel accessories allowance and so also the club membership subscriptions. The Assessing Officer treating that the assessee has failed to deduct the tax at source in respect of the perquisites given to its employees passed an order holding that there was a short recovery of tax deduction at source and an addition was made. In addition to that, interest under section 201(1A) of the Act was also levied. This order was challenged by the assessee by filing an appeal before the Commissioner of Income-tax (Appeals), ....

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....reby permitting its officers to purchase clothes of their choice with an understanding to reimburse the actual expenses incurred by the officer. Similarly, the company has permitted the employees to purchase travel suitcases, calculating machine and expenses incurred by such employees towards printing of letter heads, visiting cards, greeting cards, etc. Therefore, it contends that the said facility also falls under section 17(2)(iv). 6. According to the learned counsel for the Revenue, the Tribunal did not consider the provision of section 17(2)(iv) of the Income-tax Act, in the proper perspective. He further contends that these are incidental to the employment. Therefore, there is no necessity for the assessee to reimburse the amount. ....

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....ompany in order to entertain the company guests is required to spend the amount on behalf of the company. If the company has provided money to an officer to purchase the club membership and if the subscription and the amount incurred by the officers for his personal benefit is reimbursed by the company, such amounts spent by the officers of the company can-not be considered as business promotion. In such event, that would fall under section 17(2)(iv) of the Act. Accordingly, the said point is answered by us. 9. So far as the attire expenses are concerned, after hearing the arguments of the learned counsel appearing for both the sides, it cannot be made out from the records that what type of attire expenses are reimbursed to the officers ....